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Buss 322: Money Banking And Finance Question Paper

Buss 322: Money Banking And Finance

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2011

KENYA METHODIST UNIVERSITY
END OF 3''RD ''TRIMESTER 2011 EXAMINATIONS
FACULTY : SCHOOL OF BUSINESS AND MANAGEMENT
DEPARTMENT : BUSINESS ADMINISTRATION
UNIT CODE : BUSS 322
UNIT TITLE : MONEY, BANKING & FINANCE

TIME: 2 HOURS
Instructions: Answer Question ONE and Any Other TWO Questions.
Question One
What are the main causes of budget deficits.
(5 Marks)

Explain why the reduction of government deficits has increasingly become an important issue in fiscal policy.
(5 Marks)

Explain FIVE functions of money.
(5 Marks)

Outline the major differences between quantity and Keynesion liquidity preference theories of money demand.
(5 Marks)
Differentiate between devaluation and depreciation of currency.
(5 Marks)
What are the necessary conditions for devaluation to be an effective tool of correcting a country’s balance of payment deficit.
(5 Marks)
Question Two
Distinguish between money, near money & money substitutes.(6 Marks)
Explain any FOUR qualities of money.
(8 Marks)
Explain reasons for liquidity preference for money.
(4 Marks)
What is a liquidity trap.
(2 Marks)
Question Three
What monetary and fiscal policies can a government adopt to reduce inflation.
(12 Marks)
Explain the factors that may affect the effectiveness of the policies mentioned in (a) above.
(8 Marks)
Question Four
Why is currency devaluation ineffective in developing.
(5 Marks)
Write brief notes on;
Foreign exchange reserves.
(4 Marks)
Balance of payment current account.
(4 Marks)
Credit multiplier.
(4 Marks)
Explain the reasons why an economic system is bond to have different interest notes.
Question Five
Explain the role of the Central Bank and how it may influence the performance of a country’s economy.
(12 Marks)

Explain the role of commercial banks in your country.
(8 Marks)

Buss 322: Money Banking And Finance Question Paper

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